Robert Martz

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Supreme Court of Canada rules that Nevsun Resources might owe damages for alleged forced labour, opening the door to civil liability for breaches of international law

Litigation Bulletin
11.03.20
By Robert Martz and Paul Beke

The ruling from the Supreme Court of Canada (SCC) in Nevsun Resources Ltd. v. Araya, 2020 SCC 5 acts as a reminder to Canadian companies with international operations that they can be sued at home for alleged human rights abuses abroad.

Refugees sued Canadian company for forced labour in Eritrean mine

Three Eritrean refugees claimed that Eritrea’s military conscripted them into forced labour for the construction and operation of a mine in Eritrea. The mine was owned as part of a joint venture between the Eritrean government and a Canadian company, Nevsun Resources Ltd. (Nevsun), which owned a 60% share. The Eritrean military and sole political party controlled the subcontractors the refugees worked for at the mine. The refugees alleged that they were forced into indefinite labour at the mine for subsistence wages and subjected to harsh and dangerous conditions for years at a time.

On escaping Eritrea, the refugees sued Nevsun in British Columbia for, among other things, breaches of customary international law for (1) forced labour, (2) slavery, (3) cruel, inhuman and degrading treatment, and (4) crimes against humanity. Nevsun argued that the court should strike the claims on the basis that such claims did not exist under Canadian law. The chambers judge dismissed Nevsun’s motion to strike, and the Court of Appeal agreed.

SCC signals that Canadian companies implicated in forced labour abroad risk liability for damages

The SCC also agreed in its decision that the Eritrean refugees could take their claim to trial.

We won't know until the trial concludes whether the Eritreans will recover damages, and if so, what they would be. What we do know is that Canadian companies are at risk of being sued for breaching international law if they fail to prevent forced labour in their operations within foreign authoritarian countries. Without deciding the matter, the majority of the SCC has signaled that such claims might attract high damage awards.

International law norms are part of common law and apply to private actors

While the decision involves a complex assessment of various principles of international law, at its core the SCC found that a person may bring a claim for breaches of customary international law. Customary international law arose largely out of the Second World War and prohibits things like genocide, slavery, and piracy.

The majority of the SCC found that customary international law norms automatically form part of the Canadian common law, unless Canadian legislation says otherwise. Here there were no Canadian laws precluding claims against a corporation for things like forced labour, slavery, inhuman treatment, and crimes against humanity, as such a claim could be brought against Nevsun for these breaches.

The majority emphasized that modern international human rights law doesn't represent "theoretical aspirations or legal luxuries, but moral imperatives and legal necessities". It was also agreed that non-state actors like corporations can be responsible for violations of international criminal law.

In further developing Canadian common law, the majority thought that recognizing the possibility of a remedy for the breach of international law norms was necessary. The majority also recognized that numerous SCC decisions have accepted the general principle that “where there is a right, there must be a remedy for its violation”. The majority went on to emphasize that very strong remedies might be necessary for breaches of norms against forced labour, slavery, inhuman treatment, and crimes against humanity to deter such grave abuses:

A good argument can be made that appropriately remedying these violations requires different and stronger responses than typical tort claims, given the public nature and importance of the violated rights involved, the gravity of their breach, the impact on the domestic and global rights objectives, and the need to deter subsequent breaches. [Emphasis added.]

Conclusion

When operating businesses in authoritarian countries, Canadian companies must ensure that they aren't entangled in human rights abuses by the local regimes. Aside from their moral duties, those companies very likely have both international and Canadian legal duties to avoid those abuses. Applicable remedies may well include damages. And if so, those damages may well be punitive, designed to deter human rights abuses the world over.